FBA Due Diligence: What Buyers Look For (And What Kills Deals)
You accepted an offer. Now the buyer wants to verify everything before they wire the money. Here's exactly what they check, what kills deals, and how to prepare so your sale closes smoothly.
What Is Due Diligence?
Due diligence is the buyer doing their homework. That's it. Nothing fancy.
Here's how it works: You list your business for sale. A buyer likes what they see and makes you an offer (called an LOI, or Letter of Intent). You accept. Now what?
The buyer gets 30 to 60 days to dig into everything. Your financials. Your Amazon account. Your supplier relationships. Your inventory. They're checking that what you said is true and that there are no surprises hiding under the hood.
If everything checks out, the deal closes and you get paid. If the buyer finds something bad, they either renegotiate the price or walk away entirely.
The goal as a seller: make due diligence boring. No surprises. No drama. Clean books, clean account, clean close. The sellers who prepare for DD before listing their business close faster and at higher prices.
30-60 days
Avg DD Period
23%
Deal-Killing Issues
40%
Renegotiation Rate
Faster
Clean DD = Faster Close
The Due Diligence Checklist
Here's what a smart buyer is going to verify. If you can check all of these boxes before you go to market, you're in great shape.
Financial Verification (Most Important)
- Amazon settlement reports vs your P&L, do they match? This is the first thing every buyer checks.
- Revenue by product, is one SKU carrying everything, or is revenue spread across multiple products?
- COGS verification, do your supplier invoices match your claimed margins?
- Ad spend and ACoS by campaign, how much are you really spending to drive sales?
- Refund and return rates, high returns are a red flag for product quality issues
- Seasonality patterns, is revenue consistent or does it spike and crash?
Account Health
- Account standing, any warnings, suspensions, or policy violations?
- Listing quality, any suppressed listings or inactive ASINs?
- Review authenticity, any manipulated reviews that could get flagged?
- Brand Registry status and trademark ownership
- Any open cases or unresolved issues with Amazon
Supplier & Operations
- Supplier contracts and exclusivity agreements
- Lead times and minimum order quantities (MOQs)
- Backup supplier availability, what happens if your main supplier disappears?
- Inventory in transit and in FBA warehouses
- Logistics and shipping partners
Legal & IP
- Trademark registration and ownership, is it in your name?
- Any IP complaints (past or active)
- Pending litigation or legal disputes
- Sales tax compliance across all states where you have nexus
- Any agreements or contracts that transfer with the business
Red Flags That Kill Deals
These are the things that make buyers walk away. If any of these apply to your business, address them before you go to market, or disclose them upfront.
- Financial discrepancies, your P&L doesn't match your Amazon settlement data. This is the number one deal killer.
- Fake or manipulated reviews, instant walk-away for any smart buyer. Amazon is also cracking down hard on this.
- Undisclosed account suspensions or warnings, if the buyer finds out you hid this, the trust is gone.
- Single product doing 70%+ of revenue with a declining trajectory, too much risk concentrated in one place.
- Supplier refuses to transfer the relationship, if the buyer can't keep your supplier, the business model breaks.
- Inventory discrepancies, what you say you have vs what's actually in FBA doesn't add up.
- Hidden liabilities, unpaid sales tax, pending lawsuits, or unresolved IP complaints you didn't mention.
How to Prepare for Due Diligence
The best time to prepare for due diligence is before you list your business. Here's your checklist:
Reconcile your books with Amazon data BEFORE listing, download your settlement reports and make sure every number matches your P&L
Export settlement reports for the last 24 months, buyers will ask for these on day one
Get written confirmation from suppliers that relationships are transferable, a verbal "sure, no problem" isn't good enough
Screenshot your account health dashboard, show buyers your account is clean and in good standing
Document every SKU with its revenue, margin, and review count, make it easy for the buyer to see the whole picture
Disclose known issues upfront, small problems are fine when you're honest about them. Hidden problems kill deals.
Not sure if your business is ready for due diligence? Book a free call, we'll walk through your situation and tell you exactly what to fix before going to market.
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What Happens When DD Finds Something
Not every issue kills a deal. Here's what typically happens depending on how big the problem is:
Price Adjustment
Small accounting discrepancies, a few inactive listings, minor inventory differences. The buyer asks for a 5 to 10 percent price reduction. The deal still closes.
Renegotiated Terms
Declining revenue trend, supplier concerns, higher-than-expected ad dependency. The buyer renegotiates the deal structure, maybe more earnout, less cash at close.
Buyer Walks Away
Financial fraud, undisclosed suspensions, fake reviews, hidden lawsuits. The buyer walks. You keep any earnest money deposit (if there was one), but you're back to square one.
Be Transparent From the Start
The single best way to pass due diligence: disclose everything upfront. Small problems that are disclosed become negotiation points. Small problems that are hidden become deal killers.
Here's the truth: every business has issues. No FBA account is perfect. Buyers know this. What they can't tolerate is dishonesty. If you're upfront about your business's warts, a good buyer will price them in and move forward. If they discover something you hid, the trust is gone, and so is the deal.
Frequently Asked Questions
How long does due diligence take?
Most FBA deals have a due diligence period of 30 to 60 days. Smaller, cleaner businesses can close faster. Complex deals with multiple brands or marketplaces can take longer. The cleaner your books and account, the faster it goes.
What if the buyer finds a problem?
It depends on the size of the problem. Minor issues (small accounting discrepancies, a few inactive listings) usually lead to a small price adjustment of 5 to 10 percent. Medium issues (declining revenue trend, supplier concerns) may lead to renegotiated deal terms. Major issues (financial fraud, undisclosed suspensions, fake reviews) typically cause the buyer to walk away entirely.
Can I fail due diligence?
Yes. About 23 percent of FBA deals fall apart during due diligence. The most common reasons are financial discrepancies (your numbers do not match Amazon data), undisclosed account health issues, and review manipulation. The good news: if you are honest and your books are clean, you will almost certainly pass.
Should I do my own due diligence before listing?
Absolutely. We call this "seller-side due diligence" and it is one of the smartest things you can do. Reconcile your books with Amazon settlement reports, check your account health, verify your supplier relationships are transferable, and disclose any known issues upfront. Surprises during buyer DD kill deals. Surprises you disclose upfront just get priced in.
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